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Buying BMV and getting money back out

ninja learning Sep 08, 2015

have made an offer on a BMV property? (fingers crossed). I was hoping for a family member to buy for cash, renovate the property and then me and my business partner could buy it with a mortgage getting our cash back out. 

Our objective is to recycle as much of our cash as possible as quickly as possible.   We are hoping to purchase the property for 85K, spend 10K on refurb and have it revalued at 120K-130K. So our thoughts were if we bought it as a cash purchase in someone else’s name, then remortgage it in our names (personal not LTD) we wouldn’t have to wait 6 months to get our cash out. Does this sound do-able?

So your plan is to use your own cash but pass it to a family member to buy then get it back when they sold it to you, got it.

Two problems in making that strategy work

    1. it is not what is known as an arm’s length transaction i.e. seller and buyer are known to each other and lenders don’t like that
    2. the lenders that won’t allow you to refinance until you have owned the property for 6 months also don’t allow you to buy from any vendor that has owned the property for less than 6 months

You will need a different strategy to achieve your aim; here are two that will work

    1. Use lenders that don’t make you wait 6 months. commercial lenders and a couple of BTL lenders
    2. Sink your cash into your 1st property and refurb it.
      • As soon as you find the next property you want to buy (if it is within 6 months of buying the 1st one) get a bridging loan on the property that is now worth £120k – £130k so you can pay cash for the 2nd property
      • you will be able to borrow pretty much the £85k you paid for it based on its uplifted value.
      • Wait 6 months, get the first property mortgaged and use the money from that mortgage to repay the bridging loan.
      • Now you have the 2nd property owned outright with no borrowing, you can repeat exactly the same process when you find a 3rd property and so on.

I have set this strategy up for a number of investors.


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